Should a university education be free to all? Or should graduates pay for the benefits of their education? Another election, another chance to debate university tuition fees.

Both Labour and the Green Party have vowed to abolish fees completely and reinstate maintenance if elected on the 8 June. Currently students in poorer cities are less likely to attend university – but would scrapping fees change this?

Using Higher Education data we can see the likelihood of young people in each city choosing to study for a degree. There is a lot of variation, as the map below shows.

Click to expand.

Young people in Cambridge and London are most likely to go to university, with 48 per cent and 42 per cent respectively of their 18 year olds choosing to study for a degree. By contrast, only 19 per cent of Hull’s 18 year olds went to university. Similarly low participation levels were found in Barnsley (22 per cent).

The richer a city, the more likely young people will attend university. A clear pattern emerges from the data, showing a positive relationship between average earnings of city workers and university participation.

The perception, based on this picture, is that university fees are a barrier for people from lower income backgrounds. So abolishing fees, a seemingly progressive policy, should in theory increase university attendance of lower income groups.

But the evidence isn’t clear about the impact of fees on students from poorer backgrounds. There are a couple of indications that scrapping them is unlikely to close the participation gap.

The last tuition fee rise didn’t lead to lower participation of poorer students. At a national level (city data is only available to 2011). the 2012 increase in fees slowed the annual increase in university applications. But crucially, there was no widening of inequalities as a result. Research by UCAS showed that “differences by background reduced” from 2011 to 2013: this suggests fees did not deter poorer students as was expected. That said, it’s not yet clear what the impact of the 2015 removal of maintenance grants has been.

Research from the IFS suggests scrapping fees would be regressive, benefiting medium and high-earning graduates. This is, because student loan repayments are linked to earnings, it is high-earning graduates who pay back the largest amount of their loans. Removing tuition fees and offering maintenance grants would mostly benefit them, as poorer graduates repay much less in the current system.

The barriers to access are complex, and it isn’t clear whether abolishing tuition fees will do much to close the gap in university attendance. Combating differences in education attainment from an early age, improving career guidance and mentoring schemes all have a role to play in supporting people from poorer backgrounds to go to university.

Rebecca McDonald is an analyst at the Centre for Cities, on whose blog this article first appeared.

Speaking to the Conservative Party conference in September 2017, the UK prime minister, Theresa May, gave a stark assessment of the UK housing market which made for depressing listening for many young people: “For many the chance of getting onto the housing ladder has become a distant dream”, she said.

Now a new report by the Institute of Fiscal Studies (IFS) provides further, clear evidence of this. The study finds that home ownership among 25 to 34-year-olds has declined sharply over the past 20 years. Home ownership rates have declined from 43 per cent at age 27 for someone born in the late 1970s, to just 25 per cent for someone aged 27 who was born in the late 1980s.

The most significant decline has been for middle-income young people, whose rate of home ownership has fallen from 65 per cent in 1995-6 to 27 per cent now – most significantly hitting aspirant buyers in London and the South-East.

Causes and consequences

The IFS study lays the blame for all this on the growing gap between house prices and incomes. Adjusting for inflation, house prices have risen 150 per cent in the 20 years to 2015-16, while real incomes for 25 to 34-year-olds have grown by 22 per cent (and almost all of that growth happened before the 2008 crash).

A bleak picture. Image: Institute for Fiscal Studies.

But, as the report acknowledges, the problem goes much deeper than this. Home ownership rates differ by region. Although there has been a decline in home ownership rates for young people across all areas of Great Britain, the decline is less significant in the North East and Cumbria as well as in Scotland and the South West. The biggest decline in ownership has been in the South-East, the North-West (excluding Cumbria) and London.

So a person aged 25 to 34 is more than twice as likely to own their own home in Cumbria, as their counterpart in London. Worse, young people from disadvantaged backgrounds are less likely to own their own homes – even after controlling for differences in education and earnings. Home ownership continues to reflect a deeper inequality of opportunity in our society.

More houses needed

Part of the problem is that both Labour and Conservative governments have seen housing as a single, stand-alone market and have focused their attention on what is happening to prices in London. But housing is a number of different markets, which have regional variations and different interactions between the owner-occupier, private rented and social rented sectors.

Regional variations in house prices for similar sized properties reflect the imbalances of the economy: it is heavily reliant on financial services, which are concentrated in London, while the public sector makes up a significant share of many local economies – particularly in the North. Migration from across the UK to overcrowded and expensive areas – such as London and the South-East – have put property prices in those areas even further out of reach for would-be buyers.

To make matters worse, both Labour and Conservative governments have routinely failed to build enough houses. While the current government’s aim to build 300,000 new properties a year by 2020 is welcome, it is simply not enough to meet the backlog in demand – let alone address the fundamental affordability problem.

Where homes are being built, they’re often the wrong types of homes, in the wrong places. Family homes are being built, despite there being some 4m under-occupied such properties across the country.

Not that long ago, government was reducing the housing stock in many parts of the North, through the disastrous Housing Market Renewal programme. Houses are currently being sold in smaller cities such as Liverpool and Stoke-on-Trent for just £1. And none of the government’s actions suggest that ministers understand these issues, or are prepared to address them.

House price inflation – and the awful affect it is having on home ownership rates for young people – is part of a wider problem of the global asset bubble. This bubble has seen huge increases in the price of assets – stocks, housing, bonds – in high income countries such as the UK. Successive governments have helped to fuel this through quantitative easing, ultra-cheap money and successive raids on pension funds.

What’s needed to address this asset bubble is a substantive increase in interest rates. But while this may slow the growth in house prices, the sad truth is it will do nothing to make housing more affordable for most young people.

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